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April 2023
In the near-term, foodservice players need to navigate challenges from higher costs of borrowing, labour and raw materials. As post-Covid-19 dining adjusts to new economic realities, foodservice players should keep abreast of changing consumer preferences. This may include easy cooking at home in lieu of out-of-home dining to economise. For others, food delivery has become more entrenched - even as Covid-19 restrictions disappear.
Demand for increased convenience is structural; and so is the need for different pricing points. Packaged food and beverage sales of easy preparation and wellness categories - which performed better than on-the-go categories during Covid-19 - continued to see growth despite lifting of restrictions. Likewise, Quick Service Restaurants (QSR) have gained market share at the same time as foot traffic to foodservice outlets have lagged foot traffic to groceries.
These changes require foodservice players to continue investing in multiple touchpoints to broaden their reach and to invest in supply chain reliability, flexibility and diversification. Changing consumer trends can be deciphered by leveraging on real-time data and trends - through partnerships, data sharing - which underscore the dynamic and competitive landscape of foodservice.
As part of the foodservice industry's sustainable transition and to extract value from food waste, we also take a closer look into used cooking oil (UCO) collection and upcycling. It not only delivers value in terms of traceability and nominal cash to foodservice players, but also in cutting Greenhouse Gases (GHG). Given its part in the circular economy, UCO collection and upcycling thus benefits from digitalised supply chain management that provides traceability. Foodservice companies' waste management activities would also be eligible for green financing under UOB's sustainable finance frameworks for Smart City and Circular Economy; while trading of UCO may qualify under UOB's Green and Sustainable Trade Finance Framework.
Over the long-term, foodservice is expected to expand faster than food retail, underpinned by demographic shift and urbanisation. This offers opportunities to grow its footprint and to provide value-added services. Whichever strategy foodservice participants undertake, we expect the momentum in digitalisation and sustainability to continue.
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